Price transparency initiatives for patients

Evidence Rating

Some Evidence

Health Factors

Decision Makers

Price transparency initiatives make pricing for hospital procedures and other health care services publicly available. Most patient-focused initiatives use websites, online databases, “report cards,” or similar tools to report local hospital charges, show price variation across providers within a region, offer patients out-of-pocket cost estimates, and reveal available lower cost alternatives. Price transparency initiatives can provide comparisons to national benchmarks and include data on health care quality outcomes. Price transparency efforts can also be designed to be used by physicians, employers, health plans, and policymakers.

Expected Beneficial Outcomes (Rated)

Reduced health care costs

Other Potential Beneficial Outcomes

Increased health literacy

Evidence of Effectiveness

There is some evidence that patient-focused price transparency initiatives that include lower cost alternatives and quality indicators change consumer health care decisions and lead consumers to choose lower cost providers (Wu S, Sylwestrzak G, Shah C, DeVries A. Price transparency for MRIs increased use of less costly providers and triggered provider competition. Health Affairs. 2014;33(8):1391-1398.Link to original source (journal subscription may be required for access)Wu 2014, Whaley C, Chafen JS, Pinkard S, et al. Association between availability of health service prices and payments for these services. The Journal of the American Medical Association. 2014;312(16):1670-1676.Link to original source (journal subscription may be required for access)Whaley 2014). Such initiatives may also foster competition between providers, reducing health care prices and costs (Wu S, Sylwestrzak G, Shah C, DeVries A. Price transparency for MRIs increased use of less costly providers and triggered provider competition. Health Affairs. 2014;33(8):1391-1398.Link to original source (journal subscription may be required for access)Wu 2014, Mathematica-Tu 2014). However, additional evidence is needed to confirm effects.

Online price transparency tools (e.g., United Healthcare’s myHealthcare Cost Estimator) are associated with greater use of high quality and cost efficient physicians (Kamrudin 2014). Price transparency initiatives that also include quality data can support consumer selection of high value care, though providing these data can be challenging (Hibbard HJ, Greene J, Sofaer S, Firminger K, Hirsh J. An experiment shows that a well-designed report on costs and quality can help consumers choose high-value health care. Health Affairs. 2012;31(3):560-568.Link to original source (journal subscription may be required for access)Hibbard 2012, Mathematica-Tu 2014, Tynan 2008). Overall, successful price and quality transparency initiatives engage and collaborate with providers from the outset, present information in easy to understand, user-friendly formats, and give providers detailed feedback on performance (Tu HT, Lauer JR. Designing effective health care quality transparency initiatives. Center for Studying Health System Change. 2009;(126):1-6.Link to original source (journal subscription may be required for access)Tu 2009, Hibbard JH, Greene J, Daniel D. What is quality anyway: Performance reports that clearly communicate to consumers the meaning of quality of care. Medical Care Research and Review. 2010;67(3):275-293.Link to original source (journal subscription may be required for access)Hibbard 2010). Price transparency alone may be a less effective means of influencing consumer behavior than providing price transparency and quality data together, as consumers frequently associate high costs with high quality and low costs with low quality (Hibbard HJ, Greene J, Sofaer S, Firminger K, Hirsh J. An experiment shows that a well-designed report on costs and quality can help consumers choose high-value health care. Health Affairs. 2012;31(3):560-568.Link to original source (journal subscription may be required for access)Hibbard 2012, Mathematica-Tu 2014, Tynan 2008).

Broadening the audience for price transparency initiatives that include data on quality outcomes and lower cost alternatives to include physicians, health care providers, health plans, employers, and policymakers can greatly increase the potential cost savings of these initiatives (Mathematica-White 2014). Surveys suggest that physicians are not always aware of the costs, reimbursements, and charges associated with the care they deliver (Broadwater-Hollifield C, Gren LH, Porucznik CA, et al. Emergency physician knowledge of reimbursement rates associated with emergency medical care. The American Journal of Emergency Medicine. 2014;32(6):498-506.Link to original source (journal subscription may be required for access)Broadwater-Hollifield 2014). Information about lower cost alternatives and quality outcome data are also needed to affect provider decisions (Durand DJ, Feldman LS, Lewin JS, Brotman DJ. Provider cost transparency alone has no impact on inpatient imaging utilization. Journal of the American College of Radiology. 2013;10(2):108-113.Link to original source (journal subscription may be required for access)Durand 2013).

Impact on Disparities

No impact on disparities likely

Implementation Examples

As of June 2014, price transparency legislation has been enacted in 28 states. This legislation supports price transparency initiatives in several ways, for example, by mandating the release of price information data; mandating the creation of reports, consumer guides, or websites that disclose price information to consumers; requiring that price quotes are available for insured and uninsured consumers prior to treatment; or requiring facilities to provide patients with itemized bills upon request (NCSL-Transparency).

The Catalyst for Payment Reform (CPR) and the Healthcare Improvement Incentives Institute have reviewed recent legislation in a report card that examines consumers’ access to health care price information in all 50 states. Most states receive failing grades in this report, though there are signs of progress. New Hampshire earns an “A,” Colorado and Maine earn a “B,” and Vermont and Virginia earn a “C.” Connecticut and New York are in the process of developing all-payer claims databases and consumer-facing websites, Washington State enacted new laws, and Maryland is beginning a new effort to publish prices for health care services (CPR-Transparency 2015).

As of 2012, there were 62 state-based health care price transparency websites (Kullgren 2013). CPR considers New Hampshire’s NH HealthCost website an excellent model of a consumer-friendly price transparency site (NHID-NH HealthCost, CPR-Transparency 2015). All-payer claims databases are another way to provide public access to health care quality and cost data; such databases are in use in Kansas, Maine, Maryland, Massachusetts, Minnesota, New Hampshire, Utah, and Vermont (CWF-Love 2010).

There are also organizations working on a national scale to increase health care price and quality transparency in the US, for example, the Agency for Healthcare Research and Quality (AHRQ-Profile), Aligning Forces for Quality (AF4Q-Measurement and reporting), and the Leapfrog Group (Leapfrog).

Implementation Resources

AF4Q-Cost and efficiency 2011 - Aligning Forces for Quality (AF4Q). Lessons learned in public reporting: Crossing the cost and efficiency frontier. May 2011.

Whaley 2014* - Whaley C, Chafen JS, Pinkard S, et al. Association between availability of health service prices and payments for these services. The Journal of the American Medical Association. 2014;312(16):1670-1676.

Leapfrog - The Leapfrog Group. Who we are: An employer-based coalition advocating for improved transparency, quality, and safety in hospitals.

NHID-NH HealthCost - New Hampshire Insurance Department (NHID). Compare medical care prices in New Hampshire: The NH HealthCost website was developed to improve the price transparency of health care services in New Hampshire.

Date Last Updated

Nov 18, 2015

Scientifically Supported: Strategies with this rating are most likely to make a difference. These strategies have been tested in many robust studies with consistently positive results.

Some Evidence: Strategies with this rating are likely to work, but further research is needed to confirm effects. These strategies have been tested more than once and results trend positive overall.

Expert Opinion: Strategies with this rating are recommended by credible, impartial experts but have limited research documenting effects; further research, often with stronger designs, is needed to confirm effects.

Insufficient Evidence: Strategies with this rating have limited research documenting effects. These strategies need further research, often with stronger designs, to confirm effects.

Mixed Evidence: Strategies with this rating have been tested more than once and results are inconsistent or trend negative; further research is needed to confirm effects.

Evidence of Ineffectiveness: Strategies with this rating are not good investments. These strategies have been tested in many robust studies with consistently negative and sometimes harmful results.